Another important financial dialog is the money conversation that you have with your children. As a parent, you can empower your children by teaching them about personal finance, helping them develop smart money management skills, and instilling them with the confidence to ultimately take control of their own financial lives. Here are some ways to start an age-appropriate conversation:
With young children:
Start with the very basics. Help children develop the understanding that we use money to pay for the things we want and need, and that we earn money by working. Elementary school-aged children can earn an allowance by doing chores around the house. This helps them learn that money is earned, and that different skills have different values – the foundation for a strong, lifelong work ethic.
With teens and adolescents:
Parents can encourage financial independence and empower their children to learn the difference between needs and wants. Tell them which expenses you plan to cover, such as school supplies, and which expenses you expect them to pay for, like trips to the movies with friends. Encourage your teen to get an after-school job, or help younger teens brainstorm ways to put their talents to work. They can babysit, coach sports, tutor, walk dogs – the possibilities are endless.
You may even want to set up a savings or investment account on behalf of your teen that they can contribute to. This can be a great way to help them learn firsthand about the importance of preparing for the future and how the markets can help your money work for you.
With young adults:
Parents can help children develop responsible money management skills, pay bills, and save for the future. This is the age when many children will be living on their own for the first time, so be sure to walk your child through how to set up a realistic budget. Help them make informed decisions about student loans and credit cards, and emphasize the importance of paying off bills in full and on time. Foster a proactive approach to personal finance by encouraging kids to ask questions about anything they don’t fully understand.